Oil slips on worries Mideast rift could undermine OPEC cuts

"The relentless increase in U.S. oil production appears to have the market anxious that the Opec cuts will be completely nullified by the increased United States production", William O'Loughlin, analyst at Australia's Rivkin Securities, wrote in a note to clients on Tuesday.

Commodities brokerage Marex Spectron said it expects "lower supply of crude oil on the physical market" in the coming weeks, adding that "this is likely to provide support to the price" of oil.

Oil has traded below $50 a barrel for the past couple of weeks amid speculation that rising USA output will counter supply curbs by the Organization of Petroleum Exporting Countries and its partners, including Russian Federation.

WTI was trading at $48.10 at 2:30pm EST, up 1.48 percent on the day-with Brent trading at $50.05 per barrel, or 1.17 percent up since open.

Helping to lead markets astray, figures published by the American Petroleum Institute the day before had revealed a 4.6m drop in crude oil inventories, alongside builds for gasoline and distillates.

USA stockpiles grew by 3.3 million barrels in the week ending June 2, while the market had expected a 3.5 million barrels decline, the Energy Information Administration said. WTI fell 0.5 percent on Monday, while Brent Crude lost nearly 1 percent.




On Monday, global oil markets saw major swings, with prices first spiking almost 2% when Saudi Arabia and three other Persian Gulf states severed diplomatic ties with Qatar, a member of the Organization of the Petroleum Exporting Countries.

"Qatar is. committed to the supply cut decision and its compliance ratio ranges between 93 and 102 percent", he said. The declines in the global crude oil market also trickled down to the energy sector of the USA stock market as the S&P 500 energy sector lost 1.8% in the trading session.

The lower forecast takes into account OPEC's May 25 announcement regarding the extension of its production cuts.

Oil futures were down Wednesday over concerns over rising USA production ahead of weekly stockpile and output data from the Energy Department. In addition, OPEC is allowing Iran to continue to increase its production levels up to 3.797 million barrels per day. On the New York Mercantile Exchange, West Texas Intermediate futures were trading down 0.9% at $45.33 a barrel.

Furthermore, some remained concerned about Saudi Arabia and other nations from the region cutting ties with OPEC-member Qatar.

In late May, Riyadh announced its plans to purposely reduce exports to the United States to force a reduction in the latter's sizeable inventories, which are preventing a greater rise in global oil prices, according to Saudi Oil Minister Khalid Al-Falih.

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